What are the consequences of China’s slow growth?
Several data indicators point to a marked slowdown in China’s economic growth: according to the country’s National Bureau of Statistics (NBS), industrial output rose by 3.7 percent year-on-year in July — falling far behind the growth rate for June (4.4 percent), while retail sales rose by 2.5 percent (compared to 3.1 percent in June) and investment in the real estate sector fell by 8.5 percent. Europe’s press takes stock.
Almost a fifth of global GDP at stake
The risks for the global economy are huge, fears economist Inês Domingos in Observador:
“The strategy of ‘de-risking’ vis-à-vis China, as the EU Commission president put it, will probably not be enough to avoid some contagion for other regions. China’s GDP accounted for 18 percent of the world’s GDP in 2022. In a context where most advanced countries’ central banks are pursuing restrictive monetary policies, the slowdown in China is an additional risk factor for the global economy.”
We have a spare tyre
The global economy is adjusting to such processes, economist Alicia García Herrero reassures readers in El País:
“The Chinese economy is much more isolated from the rest of the world than we might think. ... For almost a decade China has been replacing imports with its own products. ... Its imports have been declining for some time, so that many exporters, especially exporters of industrial goods such as Germany, Korea or Japan, have already adjusted to the lower demand. ... The bad news is that China will no longer be the main driver of global growth. The good news is that the rest of the world has become used to China’s structural deceleration so we have a spare tyre at hand, namely the Asian emerging markets, first and foremost India, but also the Asean countries.”
The problem of youth unemployment
Some of the economic data is so bad that it is being hushed up, Corriere della Sera observes:
“The five percent growth target set by the government in Beijing for 2023 is at risk. For the Asian giant, falling below the five percent threshold means no longer being able to guarantee jobs and salaries for all those entering the workforce. ... The data on youth unemployment, which has risen sharply in the last twelve months, is now so sensitive that President Xi Jinping has been forced to keep it secret.”
Beijing may seek salvation in nationalism
Joe Biden’s recent description of China as a ‘ticking time bomb’ is not inaccurate, Der Tagesspiegel writes:
“You let us rule, we make sure that you prosper — that’s the deal the Chinese Communist Party has made with the population. But what if this no longer works? ... Party and state leader Xi Jinping and his leadership clique already have a plan B — and it’s called nationalism. ... Only after Taiwan’s annexation, the CP claims, can its vision of China as a dominant world power be fulfilled. ... Xi wants to be in command of the most modern and powerful military in the world by 2049. An aggressive foreign policy is still the instrument of choice for dictatorships when it comes to countering growing discontent among the people.”